So they bought an oversized office space, provisioned it like a warehouse, in a location that is horribly expensive to live near or get to. Are they surprised employees would rather not go there?
This is a baaaaad idea.
Unfortunately, everything does not always go well, and some ideas are better at handling that than others.
The second biggest problem was that companies used their company towns to force their social agendas on their employees. George Pullman would spy on employees' homes and firevict anyone living a lifestyle he didn't approve of. Tenant protections and anti-discrimination laws can take care of that (but we do need to strengthen our laws first... they're not quite there yet).
But really, I love my job but I wish there were options for living in subsidized accommodation.
You use the dorms as a low cost local alternative to homeownership.